WEST virginia Legislature

2016 regular session

Introduced

House Bill 4656

By Delegates R. Smith, Cadle, P. White, Arvon, Hamrick and McGeehan

[Introduced February 22, 2016; Referred
to the Committee on Government Organization.]

A BILL to amend and reenact §30-9-2, §30-9-3, §30-9-4 and §30-9-5 of the Code of West Virginia, 1931, as amended, all relating to granting the Finance Division within the Department of Administration supervisory control over the board of Accountancy; defining a term; clarifying the board is an advisory body; requiring board acts and recommendations be authorized by the division; and providing for the review of board rules prior to submission.

Be it enacted by the Legislature of West Virginia:

That §30-9-2, §30-9-3, §30-9-4 and §30-9-5 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:

ARTICLE 9. ACCOUNTANTS.

§30-9-2. Definitions.

As used in this article, the following words and terms have the following meanings, unless the context or associated language clearly indicates otherwise:

(1) AAffiliated entity@ means an entity that controls, is controlled by, or is under common control with, a firm. For purposes of this definition, an entity controls another entity if the entity directly or indirectly or acting in concert with one or more other affiliated entities, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than fifty percent of the voting interest in such entity.

(2) AAssurance@ means any act or action, whether written or oral, expressing an opinion or conclusion about the reliability of a financial statement or about its conformity with any financial accounting standards.

(3) AAttest services@ means providing any:

(A) Audit or other engagement to be performed in accordance with the statements on Auditing Standards;

(B) Review of a financial statement to be performed in accordance with the statements on Standards for Accounting and Review Services;

(C) Examination of prospective financial information to be performed in accordance with applicable Statements on Standards for Attestation Engagements; or

(D) Engagement to be performed in accordance with the Auditing Standards of the Public Company Accounting Oversight Board.

(4) AAudit@ means expressing an opinion about the fairness of presentation of financial statements in accordance with the statements on Auditing Standards.

(5) "Authorization" means an authorization issued pursuant to this article that entitles a permit holder or an individual practitioner to perform attest or compilation services.

(6) ABoard@ means the West Virginia Board of Accountancy.

(7) ABusiness entity@ means any corporation, partnership, limited partnership, limited liability partnership, professional limited liability partnership, limited liability company, professional limited liability company, joint venture, business trust or any other form of business organization. The term Abusiness entity@ includes a firm.

(8) "Certificate" means a certificate as a certified public accountant issued or renewed by the board pursuant to this article or corresponding provisions of prior law.

(9) ACertified public accountant@ or ACPA@ means the holder of a certificate.

(10) AClient@ means a person or entity that agrees with a licensee or licensee=s employer to receive any professional service.

(11) ACommission@ means compensation, except a referral fee, for recommending or referring any product or service to be supplied by another person.

(12) ACompilation services@ means providing a service performed in accordance with the statements on Standards for Accounting and Review Services that presents, in the form of a financial statement, information that is the representation of management without an expression of assurance on the statement: Provided, That this definition does not apply to the use of the term Acompilation@ in section thirty-one of this article.

(13) AContingent fee@ means a fee established for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of the service. A fee fixed by a court, taxing authority or other public authority is not a contingent fee. (14) AExamination,@ when used with reference to prospective financial statements, means expressing an opinion about the fairness of presentation of financial information in accordance with the statements on Standards for Attestation Engagements.

“Division” means the Finance Division within the Department of Administration.

(15) AFinancial statement@ means a writing or other presentation, including accompanying notes, which presents, in whole or in part, historical or prospective financial position, results of operations or changes in financial position of any person, corporation, partnership or other entity.

(16) AFirm@ means any business entity, including but not limited to accounting corporations and professional limited liability companies, in which two or more certified public accountants or public accountants hold an ownership or membership interest, in terms of the financial interests and voting rights of all partners, officers, shareholders, members or managers, and the primary business activity of which is the provision of professional services to the public by certified public accountants or public accountants.

(17) AFirm ownership requirements@ means, with respect to:

(A) Any professional limited liability company organized pursuant to article thirteen, chapter thirty-one-b of this code, consisting of one or more licensed certified public accountants or licensed public accountants;

(B) Any other firm where:

(i) A simple majority of ownership of the firm, in terms of financial interests and voting rights of all partners, officers, shareholders, members or managers, belongs either to:

(I) Certified public accountants holding a certificate under section twelve of this article or the equivalent provision of another state; or

(II) Public accountants who have met the continuing professional education requirements of subsection (b), section twelve of this article and who are not subject to the exemption or limitation set forth in subdivisions (1) or (2), subsection (b), section twelve of this article or similar provisions of another state.

(ii) All owners of the firm who are not certified public accountants or public accountants are active participants in the firm or in affiliated entities.

(18) AForeign@ means any country other than the United States.

(19) AGood moral character@ means lack of a history of dishonesty or felonious activity.

(20) AHome office@ means the client=s office address.

(21) AIndividual practitioner@ means a certified public accountant or a public accountant who offers professional services to the public but who does not practice in a firm.

(22) "License" means a certificate, permit, registration or authorization.

(23) "Licensee" means the holder of a license.

(24) "Manager" means a manager of a professional limited liability company.

(25) "Member" means a member of a professional limited liability company.

(26) ANonlicensee@ means a person or business entity that does not hold a license.

(27) AOut-of-state certificate@ means a valid certificate as a certified public accountant or equivalent designation issued or renewed under the laws of another state: Provided, That Aout-of-state certificate@ does not include any certificate as a certified public accountant or equivalent designation that was issued or renewed solely by virtue of a holder=s prior status as a public accountant or its equivalent in the state of issuance and not by virtue of the holder=s having met the certification requirements of the state of issuance.

(28) AOut-of-state permit@ means a valid permit as a firm of certified public accountants or another designation equivalent to a permit issued or renewed by the board and that is issued or renewed under the laws of another state.

(29) "Peer Review" means a study, appraisal or review of one or more aspects of the professional work of a licensee by a person who holds a certificate or an out-of-state certificate and who is not affiliated with the licensee being reviewed.

(30) "Permit" means a permit issued to a firm pursuant to this article.

(31) APrincipal place of business@ means the licensee=s office location in the state where the licensee holds a certificate or registration.

(32) AProfessional services@ means those services that involve the specialized knowledge and skills of a certified public accountant or a public accountant delivered by any means, including but not limited to, in person, by mail, telephone or by electronic means.

(33) APublic accountant@ means a person holding a registration who is not a certified public accountant.

(34) AReferral fee@ means compensation for recommending or referring any service of a licensee to any person.

(35) ARegistration@ means a registration as a public accountant issued by the board pursuant to prior law governing the registration of public accountants and renewed by the board pursuant to this article.

(36) "Report," when used with reference to financial statements, means an opinion or disclaimer of opinion or other form of language or representation which states or implies any form of assurance or denial of assurance.

(37) "Rule" means any rule proposed for legislative approval by the board pursuant to this article.

(38) "State" means any state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands or Guam.

(39) ASubstantial equivalency@ or Asubstantially equivalent@ means or refers to a determination by the board or its designee that the education, examination and experience requirements contained in the statutes or rules of another state are comparable to or exceed the education, examination and experience requirements contained in the Uniform Accountancy Act, or that an individual certified public accountant=s education, examination and experience qualifications are comparable to or exceed the education, examination and experience requirements contained in the Uniform Accountancy Act.

(40) ASubstantial equivalency practitioner@ means any individual whose principal place of business is not in this state, who holds a certificate from another state and has complied with the provisions of section sixteen of this article.

(41) AUniform Accountancy Act@ means the Uniform Accountancy Act, fifth edition, revised (July 2007), jointly published by the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy.

§30-9-3. Board of accountancy; appointment; terms, qualifications of members; removal of members; compensation of members.

(a) On July 1, 2016, the West Virginia board of accountancy is hereby continued as an advisory board to the Finance Division within the Department of Administration.

(b) (1) Commencing with the board terms beginning July 1, 2001 2016, the board shall consist of seven members appointed for terms of three years by the Governor with the advice and consent of the Senate. Five members must be certified public accountants; one member must be a public accountant so long as twenty-five or more public accountants are registered by the board, but if there are fewer than twenty-five public accountants registered by the board, then the member may be either a public accountant or a certified public accountant; and one member must be a citizen member who is a resident of this state, who is not licensed under the provisions of this article and who also is not a bookkeeper, enrolled agent or a person who provides or offers to provide to the public any bookkeeping, tax preparation, financial advisory or insurance service. Provided, That the members of the board in office on July 1, 2001, shall continue to serve until their respective terms expire

(2) Each licensed member of the board, at the time of his or her appointment, must have held a license in this state for a period of not less than five years immediately preceding the appointment and each member must be a resident of this state during the appointment term.

(3) Each appointment of a public accountant, whether for a full term or to fill a vacancy, must be made by the Governor from among three nominees selected by the West Virginia public accountants association and each appointment of a certified public accountant, whether for a full term or to fill a vacancy, must be made by the Governor from among three nominees selected by the West Virginia society of certified public accountants. Provided, That when the appointment of a certified public accountant is to fill the seat held on July 1, 2001, by a public accountant, then the appointment, whether for a full term or to fill a vacancy, must be made by the Governor from among three nominees selected by the West Virginia public accountants association When the appointment is for a full term, the nominations must be submitted to the Governor not later than eight months prior to the date on which the appointment will become effective. When the appointment is to fill a vacancy, the nominations must be submitted to the Governor within ten days after a request for the nominations has been made by the Governor to the president of the West Virginia society of certified public accountants or president of the West Virginia public accountants association. If the society or the association fails to submit to the Governor nominations for an appointment in accordance with the requirements of this section, the Governor may make the appointment without the nominations.

(c) No member may serve more than two consecutive full terms, and any member having served two full terms may not be appointed for one year after completion of his or her second full term. A member shall continue to serve until his or her successor has been appointed and qualified.

(d) If a board member is unable to complete a term, the Governor shall appoint a person of similar qualifications to complete the unexpired term: Provided, That if the board member is a certified public accountant or public accountant, the Governor shall appoint a person from any nominees submitted pursuant to subdivision (3), subsection (b) of this section. Each vacancy occurring on the board must be filled by appointment within sixty days after the vacancy is created.

(e) The Governor may remove any member from the board for neglect of duty, incompetency or official misconduct.

(f) Any member of the board shall immediately and automatically forfeit his or her membership if he or she has his or her certificate or registration suspended or revoked by the board, is convicted of a felony under the laws of any state or the United States, or becomes a nonresident of this state.

(g) Each member of the board shall receive compensation and expense reimbursement in accordance with section eleven, article one of this chapter.

§30-9-4. Powers of the board.

The board may not take any action pursuant to this article or pursuant to article one, chapter thirty of this code, but shall instead propose recommendations to the Finance Division within the Department of Administration. The division shall review each recommendation of the board and may approve, amend, or reject any action or recommendation proposed by the board. The division may conduct its own investigation of any board action or recommendation. The board shall follow all determinations made by the division. The division has all the powers set forth in article one of this chapter. and in addition The board may:

(1) Sue and be sued in its official name as an agency of this state;

(2) Hire, fix the compensation of and discharge the employees necessary for the administration of this article;

(3) Examine and determine the qualifications of any applicant for a license;

(4) Issue, renew, deny, suspend, revoke or reinstate licenses and take disciplinary action against licensees;

(5) Investigate alleged violations of the provisions of this article, reasonable rules promulgated hereunder and orders and final decisions of the board;

(6) Conduct hearings upon charges calling for the revocation or suspension of a license or take disciplinary action against a licensee, firm or substantial equivalency practitioner;

(7) Cooperate with the appropriate authorities in other states in the investigation and enforcement of violations of this article or comparable acts of other states;

(8) Propose rules in accordance with the provisions of article three, chapter twenty-nine-a of this code; and

(9) Take all other actions necessary and proper to effectuate the purposes of this article.

§30-9-5. Rule-making authority.

(a) The board shall propose rules for legislative approval which shall be submitted to the division for review. The division may approve, amend or reject the submission of the board legislative rules, prior to the proposed rule being filed with the Secretary of State in accordance with the provisions of article three, chapter twenty-nine-a of this code to implement the provisions of this article, including, but not limited to, the following:

(1) The education required of an applicant;

(2) The experience required of an applicant;

(3) The examination administered under this article;

(4) Issuing or renewing a certificate, registration, permit or authorization;

(5) Denying, suspending, revoking, or reinstating a certificate, registration, permit or authorization;

(6) The conduct of investigations;

(7) Firm ownership requirements;

(8) Accounting corporations;

(9) Substantial equivalency requirements;

(10) Continuing professional education requirements for licensees, including exemptions;

(11) Peer review requirements;

(12) Professional conduct requirements;

(13) Identifying professional services required to be performed in accordance with the applicable statements on standards;

(14) Use of the titles Acertified public accountant,@ ACPA,@ Apublic accountant@ and APA@;

(15) Use of commissions, referral fees and contingent fees;

(16) Fees for the issuance and renewal of a certificate, registration, permit or authorization and other fees authorized by this article; and

(17) Other rules the board considers necessary and proper for implementing the provisions of this article.

(b) All rules in effect on July 1, 2001 2016, will remain in effect until they are superseded: Provided, That beginning July 1, 2016, all legislative rules shall be promulgated by the division on behalf of the board.

 

NOTE: The purpose of this bill is to provide that the board of Accountancy is an advisory board under the Finance Division within the Department of Administration.

Strike-throughs indicate language that would be stricken from a heading or the present law, and underscoring indicates new language that would be added.